According to US Bancorp, U.S. banks have more than $25 billion worth of exposure in Brazil, led by Citigroup's $11.4 billion and FleetBoston Financial's $10.3 billion. J.P. Morgan Chase has $2.1 billion exposure and Bank of America
BAC, +0.81%
has just under $2 billion. See fully story.

Citi shares are also benefiting from some moves to revamp its corporate governance, structured finance and accounting guidelines.

In a letter to employees Wednesday, Chairman Sandy Weill said the company will require its structured finance clients to make more disclosures and will not do business with firms attempting to hide debt from their balance sheet.

Weill also said Citi will begin to include options costs as an expense on its balance sheet.

The move will have minimal impact on the nation's largest bank's balance sheet, totaling 3 cents per share for all of 2003, according to a Lehman Bros. research report.

Banks likely to outperform despite delayed recovery - Goldman

She based her conclusions on the fact that those businesses that have shown recent strength -- mortgage banking, deposits and fixed income underwriting -- are likely to remain firm. And, any Fed rate cuts in the second half would also help the banks.

"Well-above-market dividend yields are also an aiding factor for the group, averaging 3.5 percent versus 1.9 percent for the market. In an environment of high, single-digit, annual equity returns, banks offer dividend yields of nearly half that of possible market returns," Appelbaum added.

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